THE DYNAMICS OF NEGOTIATION IN OBTAINING

FINANCIAL STABILITY AS AN ARCHITECT

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Presenter

ARC. NGOZI INNOCENT OKOKWU, MNIA, LLB

Managing Director/CEOFirst New Generation Limited,

Lagos State

THE DYNAMICS OF NEGOTIATION IN OBTAINING FINANCIAL STABILITY AS AN ARCHITECT

Negotiation Is the exchange of valuable resource for another. It enables both parties achieve a satisfactory outcome. It is the back and forth communication designed to make a deal when you and the other side have some shared interest and divergent interests (Roger Fisher, William Ury, 1981).

It is an everyday event and most times not easy and cumbersome. The paradigm often leads to zero sum game where “ones loss is another’s gain”.This sometimes presupposes that the issues and interests are single and simple such as price only. Even then, from a single issue negotiation such as price can arise, other sub issues such as time, mode and other terms of payment. Such terms can then create value for the parties in terms of managing cash flows to being able to implement the price decision reached.

Another reason for the ineffectiveness of typical styles of negotiations is that people see only two ways to negotiate – either the hard way or the soft way. 2

The hard negotiator sees negotiation as a battle to be won rather than a problem to be solved by the parties. He sees it as a contest of wills and very often he ends up also toughening the other party who is equally aware of the contest.

In the event that the hard negotiator wins, he may have problems maintaining a relationship with the loser once the loser becomes aware that he has been taken.

On the other hand is the soft negotiator who is afraid of a confrontation or the lingering on of a matter. He wants an amiable settlement so much that he ends up being exploited by the other side and then he resents the other side for having cheated him.

There is however a fair balance between these views of negotiations which to my mind are extremes. That fair balance lies in having a principled negotiation – a win-win approach to negotiation. The method of principled negotiation focuses on having a negotiation on the merits, on the merits, on the basis of interest of the parties without having to haggle over the positions of the parties.

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• DISCUSS

• PREPARE

• PROPOSE

• BARGAIN

• AGREE • NOT AGREE

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THE PROCESS OF NEGOTIATION

In the process of negotiation, many things happen at once. These includes butnot limited to:-

❖ Considering and stating your needs

❖ Pick up all the direct and subtle signals and nuances originating from theother party

❖ Some schools sees the process as a fight and full intrigue

❖ To some it is a battle to win the other side where possible

Positional bargains appear to be a frequent cause of breakdowns in negotiation(roger Fisher and William Ury in ‘Getting to Yes’ (1981).

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The approach should be problem solving rather than a battle to be won.

❖ A collaborative rather than a competitive environment is put in place

❖ Get both parties to work together to resolve the problem (A win-winoutcome is achieved).

❖ Set the negotiation process to be constructive

❖ Listen more and talk less where necessary. Make it obvious that you aretaking a problem solving approach

❖ Involve in the process of reaching a conclusion

❖ Show your willingness to accept the other side’s point of view (where theother side is taking an aggressive approach or a win-lose or lose-loseapproach, you can manage the situation by helping them save face, puttingyour irritation away in a corner for later on and also acknowledging thepositive intention behind the action).

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PREPARING FOR NEGOTIATION

(“I may be a slow walker, but I never walk backwards” – Abraham Lincoln)

❖ Constitutes more than half of the overall negotiation process (Foundation forall successful Negotiations)

❖ Estimating the needs and outcomes of the other party

❖ Good background knowledge about the subject matter of the negotiation

❖ Listing your own desired outcomes and needs, what to achieve, why youwant to achieve that and that must be positive (sadly some people knowwhat they do not want, but find it difficult to know what they want)

❖ Knowing your priorities (what you do not want and your limits.

❖ To know what point you will say no to the thing that clearly is not in yourinterest

❖ Review your alternatives using the BATNA formula, designed by Fisher andUry, in getting to Yes (1981).

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(BATNA – a Best Alternative To a Negotiated Agreement)

❖ This helps you manage your bottom limit where there is no breach

❖ Manage your DESPERATION FACTOR thereby giving you confidence to walkout of a negotiation that is not in your interest.

❖ Helps you establish your IDEAL, REALISTIC AND FALL BACK POSITIONS.

- Ideal situation – do not wish for heaven. Wish for an ideal that has a chanceof success

❖ Keep realistic position as realistic as possible

❖ Keep your fallback position to a really bottom line position otherwise itaffects your own ability to manage the process when faced with counterposition from the other side.

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❖ 5 STEPS AND PRACTICES THAT CONSISTENTLY WORK IN NEGOTIATIONPROCESS - BY WATERSHED ASSOCIATES

1. PREPARE – Identify potential value. Begin to understand interests. Developfacts base.

STAGE 1

❖ First Stage of any negotiation (though people often don’t give it the time itwarrants) there is no short cut else

❖ You charge into information exchange stage or even directly to bargaining

❖ It starts with determining if this is a potential collaborative situation so youcan select the better strategy

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Should I be negotiating

❖ Spend time researching information, analyzing data and leverage

❖ Identify interests and positions before finally considering therelationship you want to build

KEY ELEMENTS OF PREPARATION

• Initial points to consider

• Research Covers – Players and Stakeholders, the fact base standards andbench marks.

• Analysis – Re-organizing data, anticipating what will happen, assessingstrength and risks

• Identification of your and their interests

- Positions – Goals, most desired outcomes

- Least Acceptable Agreements

- BATNA

- Concessions

What I need to KnowOrganize information

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• Know the Relationship you want to build

- Plan to build Trust

- Prepare for emotional reactions

- Develop probes to discover “Don’t Knows’

- Test Assumptions

2. Information Exchange and Validation

– Discovering and creating value

- Assess interests

- Build rapport and Trust

STAGE 2 – INFORMATION EXCHANGE

- Engaging the other side

- Share information

- Explore options that address interests (what you each need; as opposedto positions – what you each ask for later in the bargaining stage.

(Position and Interest – critical to successful negotiations (e.g EmployeePositions – she has asked to be assigned to Project A)

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INTEREST – To get promoted – Project of high visibility- Critical Assessments in Exchange Stage- Trustworthiness – are they honest and dependable- Competency – Are they credible and able- Likeability – can you work well together- Alignment of interests – Are your interests aligned with theirs.

Master tool for exchange stage is the PROBEPROBE:- Defined as a technique employed to encourage the employee to give amore detailed answer to a question and elaborate on his previous response e.ganything more?, ‘why do you think that is fair?’, ‘How did you come up with thatsolution?’• A GO /NO-GO DECISION TIME IN EXCHANGEIf assessment is negative, make adjustment or implement your BATNA (BestAlternative To a Negotiated Agreement).

If possible, move forward.With Trust, development, explore for creative solutions that address interests andsee the potential to create real value.

- Then develop a joint agenda

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3. Bargain

- create and distribute value

- Address interests

- Make and manage concessions

STAGE 3 – BARGAIN

- Face-Time with the other person (even where you are not face to face). Giveand take happens. Where this satisfies both parties’ interest, you build a lastingrelationship and a fruitful outcome

- Create value and with trades finally capture value.

*Note: That to be trusted, you must be genuine”.

TOOLS FOR BARGAINING

- The PROBE

- Creativity

Bargaining like all interpersonal relations, emotions can help or hinder progress

- Behavioral Skills

- Communication Skills ) are critical to create Value and execute trades to captureValue

- When solution satisfy everyone's need you will be most successful in yourbargain.

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4. CONCLUDE:

- Capture value

- Confirm interest have been met

- Thank Them

• You reach an agreement

• Time to find out if the other side has the capacity to follow through withthe things they said they would do

• Time to put in writing the common interests and a comprehensive summaryof the agreement

• Consider the strategy here to lock-in a commitment

• Be sure to agree on next steps as well.

• Never forget to thank the other party for their willingness to negotiate -even when no agreement is reached.

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5. EXECUTE

- Expand Value

- Address Changing interest (Variations)

- Strengthen Relationships

• Implementation of the agreement

• It could be the preparation for the next negotiationopportunity

• Follow through on promises made in order to strengthenthe relationship and build trust

• Learn more on this stage to help in the next stage, leadingto easier negotiation next time around

• Likely to apply the total negotiation process and bestnegotiation Process (BNP) to unexpected events, failuresin performance and the inevitable changes

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POSITION INTERESTS

What they say they want Why they want it

Surface statements (whereyou or they stand) Rarely

provide insight into underlying motivations values or

incentives

Parties underlying reasons values or motivations. Explains why someone takes a certain

position

Certainty of terms e. Contract Duration

Conditions precedent to terms – e.g LAD Precedent to

meeting Contract terms and Condition)

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CREATING A NEGOTIATING ENVELOPE

- Be clear about all your interest- Grasp the other side’s interests- Helps you define the boundaries for the conversation

POSITIONS

❖ DEMANDS

• Things you/They say you will/won’t do

• Subjective Wants

• What people say they want

• Start a month early

INTERESTS

❖ CONCERNS

• Fears and aspirations

• Objective needs

• Why they want it underlying motivations

• Finish project on time

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ARCHITECTS EXAMPLE – INTEREST V POSITIONS

❖ Architect’s Position

• Architects Interest

❖I want a one month extension tofinish the project

• Before facing unforeseenobstacles in completing thisproject on time, the Architectapproved the site supervisor’svacation and wants todemonstrate to the team that shefights for their needs and keepsher words.

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ARCHITECTS EXAMPLE – INTEREST V POSITIONS

❖Client’s Interest

• Way’s to address Interests

❖Result

❖Get the Project done on time

• Client gives Architect (Head ofProject Team) discretion to changeteam members assigned to theproject and extends deadline onanother project so that teammembers can be brought overduring the lead supervisor’sabsence.

• Approve budget for over timecompensation or additional support

❖Project is done on time without anextension and the Architect keepsher word on approved vacations

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USING YOUR POWER EFFECTIVELY

(“Power can corrupt, but absolute power isabsolutely delightful’ – Anonymous)

- Power is one of the most influencing factors in anegotiation – Ability of the parties to arrive in adeal.

- It affects the outcome of that negotiation

- Environment, the situation and the perceptioncan affect or alter the balance of power

- It should not unduly influence one side in thenegotiation unless he has no other alternative

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In ‘The Bases of Social Power”, 1959 by French and Raven,five different sources of external power was identifies:-

1. Legitimate or Position Power:- Derives from position oneholds and which is recognized by some power e.g Head ofProject Department of an institution

2. Reward Power:- This is the ability to give something tosomeone who wants it or to withhold the same. To beeffective reward power needs to be relevant to the recipient

3. Coercive Power:- This is the ability to make threats aboutwhat will happen if you do not get what you want andhaving those threat believed. The crucial element here is notas much the real ability of carry out the threat as the reallikelihood of whoever you are threatening believing that youhave the means to carry out the threat.

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4. EXPERT POWER

The power that comes with experience and knowledge.

5. OTHER POWERS

Charismatic, connection, information, physical andnegative powers

To make good use of your power, whether it is power ofthe majority, it helps to be aware of your externalpower as well as your internal power. Your internalpower comprises your beliefs about yourself, your selfesteem and self confidence. It is advisable to practiceincreasing your own internal power.

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PUTTING YOUR CASE EFFECTIVELYPeople’s impression of you- What they see come from you. 55% of the impression

you make on other people will be governed by whatthey see. This includes colour, sex, appearance,posture, facial expression and your dressing.

- What they hear. 38% of the impressions you makewill be governed by what they hear. This includestone of voice, accent, speed and pitch of voice andclarity of speech.

- Actual words used by you. 7% of the impression youmake is governed by the words you use. So thismeans that the other side is far more likely to beinfluenced by how confident you look than by thewords you use.

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SKILLS AND STRATEGIES(Negotiation is all about building bridges, it get better all the time”)Skills and strategies help the process of bridging the gap betweenopposing parties and expediting satisfactory conclusion. They can makethe difference between a failed negotiation and one which moves forwardto an agreement. As a guide, it is advisable to:• Start positively by stating your objectives and then asking for theirs• Ask for their opening position and then state yours.• Take time to think and ask questions appropriately• Draw their attention and keep the atmosphere positive• Avoid irritants, counter and unnecessary argument dilution• Test understanding during the negotiation, say what you feel and often

summarize on the issues agreed thus far.• Assess the offers you receive against your realistic, ideal and fallback

positions• Assess the offers you receive in terms of value, implementation and

price• Soften disagreements

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BARGAINING

(‘Problem-solving is about the willingness to move’).

One of the bedrock of negotiation is the willingness to move.Bargaining and trading separate negotiations from othertransactions between two parties. The process facilitatesmovements of parties towards each other. A crucial skill forbargaining is that of giving and receiving signals. This involves non-verbal communication, signs of tension, positioning of the body,the tone of voice and other forms of unconscious expressions.

The essential skills of bargaining (signaling, picture painting,trading and packaging) are well worth polishing. It helps to brushup your awareness of signals sent by others, and to be aware ofconscious as well as the unconscious signaling. You can use phasessuch as ‘suppose we…’ and ‘How would it be if’ to create the visionof outcomes. You may need to package demands and proposals tobe able to give in one area while gaining in another.

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TACTICS, TRICKS AND THREATS

Tactics, Tricks and Threats are integral parts of negotiation, thoughthey are not always constructive. Some tactics are useful howeverothers need to be handled well. Threats need to be used withcaution and responded to with care and dexterity.

Adjournments are a useful tactic. You can use adjournments forassessing offers, and for gaining thinking time or cooling off time.They can also be used for purposes of checking facts andconsulting colleagues. It must be stated that a good negotiatorshould not be intimidated by the ‘tough’ stance. He should standup to his rights. He should challenge tactics when they seem like atrick. The negotiator should not give in to threats unless he has noalternatives.

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LISTENING

(‘The good listener gets more time to think and to see’)

Listening to what the other person has to say helps the quality ofnegotiation. Do not just make assumptions, or hear what youwant.

Listening entails more than that or simply listening to your ownvoice. It is important to avoid bad listening habits or superficiallistening. Be attentive, look at the speaker all the time, and nodoccasionally to demonstrate a communication connect with theverbal behavior and eye contact to show people that you arelistening, test your understanding and clarify meanings, and lastlyexpress feelings, ask appropriate questions and summarize yourunderstanding from time to time.

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QUESTIONING

(‘I keep six honest serving men (They taught me well). Their names are –’what’, ‘why’, ‘When’, ‘How’, ‘Where’, and ‘Who’ – Rudyard Kipling)

Questions are a versatile tool of negotiation and also form a vital part of it.They allow you establish a wider framework for the negotiation, move out ofstalemates, clarify details, stimulate thinking, gain commitment and to floatideas. To be more effective in your negotiations, you would need to improveyour use of this stool by:-

- Using open questions to encourage people talk:

- Using closed ones to get short ‘yes’ & ‘no’ answers

- Using ‘chunking up’ questions such as ‘what will having ‘x’ do for you?’ toget behind stated reasons for doing or wanting things

- Using ‘chunking down’ questions such as ‘how specifically’? To get detailsand unpick generalizations.

- Challenge assumptions by asking ‘what would happen if you did / didn't?’

- Do not accept statements at face value. Use probing questions to find outmore detail.

- Stimulating thinking by asking ‘what if’.28

- Adopt a conversational approach, not an interrogation

- Gain commitment by putting suggestion in the form of question

- Use questions as a way to defuse aggression and for calming conflict.

THINKING FAST

Thinking creatively can extend the speed and ability of the brain to come upwith new, different and sometimes better answers to a problem. To do thisfirst you need to recognize the barriers to creative thinking, such as patterns,the fear of looking a fool, not wanting to go against dominant ideas, orpolarizing tendencies, and then making a conscious effort to overcomingthem, you would need to:-

- Train yourself to use questions to challenge assumptions as well asstimulate your thinking e.g. ‘what other ways?’

- Learn to reframe problems to see them in a different light

- Take the worst consequence approach. What would be the worst thatcould happen? Would it matter?

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DEALING WITH THE UNEXPECTED

Unexpected circumstances, reactions, demands, ideas, co-operation or opposition can throwus off balance. Learning to activate your rapid response mechanism at such times canincrease your ability to cope. Reduce the fear of the unexpected by concentrating on yourability to handle the situation.

- Keep your cool in the way that suits you best

- Gain time by expressing your surprise or repeating their statement back to them

- Apply your natural curiosity, don’t just say ‘no’. Also be sure of unexpected cooperationbefore accepting finally

MOVING THROUGH STALEMATES

If a negotiation reaches a point where no further movement seems possible, it has reacheda stalemate. When this happens:-

- Use questions to gather new information which help to unfasten all parties from theirfixed positions.

- Apply a mental icepack to avoid feeling irritated or angry, while you positively look forcommon grounds

- Summarize both positions and remind each other of the consequences of not reachingagreement

- Address their concerns and find out why they are staling

- Look for creative ways forward

- If all else fails, fall back on your already prepared BATNA (best alternative to a negotiatedagreement) 30

CONCLUSION

In John Maxwell’s book of Winning with people, the critical questions we must ask ourselvesif we want to win a negotiation process includes but not limited to:-

1. Readiness:- Are We prepared for the relationships

2. Trust:- Can we build mutual Trust

3. Synergy: Can we create a win-win relationship.

Hence we need to build The Bedrock Principle (Trust is the foundation of any Relationship)

- The situation Principle (Never let the situation mean more than the relationship)

-The Bob Principle (When Bob has a problem with everyone, Bob is usually the problem).

- The Approachability Principle (Being at ease with ourselves helps others be at ease withus)

- The Fox Hole Principle (When preparing for battle, dig a hole big enough for a friend-theother party to the negotiation)

Therefore to succeed we must imbibe the 7 core behavior (otherwise known as The HonourCode) by Lee Ellis

1. Tell the truth even when its difficult

2. Treat others with dignity and respect

3. Keep your word and your commitments

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4. Be ethical

5. Act responsibly: do your duty and be accountable

6. Be Courageous

7. Live your value for if you find true success you have only fulfil the highest, most truthfulexpression of YOURSELF as a human being (Oprah Winfrey)

FINALLY

- Do not demand an outcome that is not fair to both sides

- Give continuous feedback to the other side immediately if possible

- Maintain your factual position every time it is challenged

- Observe body language

- Use your team as observers

- Be a contrarian (play the devil’s advocate by putting yourself in your opponent’s shoesand try to ascertain what tactics he must use to achieve its aims)

- Convey the impression of professionalism, integrity confidence and efficiency

And lastly, before making a quick decision consider why you want to make it quickly. Alsoconsider if it will honour God and what it might cost others.

If you are afraid to make a decision especially at the critical stage of negotiation, think aboutwhy that might be. Most of all pray for a moment, prayer and patience can prevent loss ofconfidence, fears, apprehensions and doubts to avoid “Go Fever”.

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REFERENCES

- 1. Legal and Regulatory Aspects of Commerce – Kenna & Associates

- 2. Winning With People – John C. Maxwell

- 3. Mediation Advocacy – Andrew Goodman & Alaster Hammerton

- 4. Oprah Winfrey – Harvard Association Lecture on Being Yourself

- 5. The Law and Practice of Compromise by Thomson Sweat

- 6. Mediation – An Overview CEDR Pamplet by Mackie, Kart

- 7. Getting to Yes : Negotiating an Agreement Without Giving In – Fisher R,and Ury W.

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